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Tuesday, November 30, 2010

Elliott Wave Update ~ 30 November

I have been using the Wilshire a lot because I think it best reflects the overall waves of the entire market. Primary count is still some kind of Minor 4 pattern.

Trouble is, there is such short term variation potential, that a dominant pattern has yet to emerge. Price action has  been stubborn yet not really bullish.   Sentiment is stuck in neutral in many respects. Its a largely mixed picture and the market has responded in its usual schizophrenic fashion.

Will 1173 break down hard short term? I would't bet against it.

Will 1200+ again be attained short term?  I wouldn't bet heavily against it. We are a bit in no man's land unless of course this kind of price action suits you as it does some.

So here we sit. The waves suggest that no matter the short term struggles, there is not yet any impulsiveness to the downside (nor upside obviously). So that suggests corrective waves. And taking the next logical EW theory step, an eventual new high above 1227 SPX.

So we'll throw some squiggle counts up there and see what sticks.   It probably won't much matter as the MM's would just as likely break support or retake resistance in the usual manner - either running up futures or selling them off prior to the open.  So we'll either look like geniuses or fools.

I could just as easily lean toward the downside with a differing count - double ZZ down from peak (and fulfill an H&S setup). New day of the month tomorrow. We'll again give the count the benefit of the doubt for the bulls.

I could see a H&S setup in here too with a downside target under support.
Breaking the market up into some various popular indexes shows just how divergent the market is at the moment. Some indexes are in good shape others have struggled.  New day tomorrow should bring some rotation. But the bottom line is there is not yet any impulsing down and therefore that supports the count of Minor 4.
CRB
BPSPX has held up well because support has held. Should we have a good down day tomorrow, this will retreat. Its one simple reason to be biased to the shortside overall in the longer term - BPSPX is still way elevated.
NYAD has formed a channel. So if my overall count is correct, it should soon make a move to the upside - which should mean higher market prices
The longer term NYAD is sitting near a 21 month upchannel line so its a logical place for a bounce to occur. (of course its a logical place for a spectacular failure too!). But my count shows its missing a wave 5 of (5) of [5].
Bottom line:
1. Major support (1170 area) is holding
2. Waves seems corrective in nature (supports Minor wave 4 count)
3. No impulsing down. (suggests that even if lower prices are coming here short term, it may still be considered Minor 4 as a primary count.)
4. NYAD count is holding well and may be near a bounce point (channel line)

So until something alters this picture, this is why we have a primary count of Minor 4.
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